Greg Sherwood MW: Does the Wine Trade Really Understand the Next Generation of Consumers?
By Greg Sherwood, 31 October 2019
In my privileged position as a wine buyer, I get to travel a fair amount speaking to both producers and consumers in international markets. While you’d expect me to spend a disproportionate amount of time examining new vintages and new trends coming out of various markets, I have found myself lately spending far more time contemplating whether all of us in the wine trade are doing enough to understand what it exactly is consumers want or are going to want as the whole pattern of wine consumption evolves hand in hand with a new generation of wine drinkers as they mature and take over the baton from the previous generation. Of course the commonly held adage is that the wine industry is one of the slowest businesses to evolve, not approaching growth logically. If there is one thing most wine businesses are very good at, it is taking their bread-and-butter consumers for granted presuming they will always be there to prop up sales and bolster their bank accounts.
After one recent trip to Piedmont in Italy, dinner table discussions with various producers ebbed and flowed about the current state of play around the inevitable topic of Brexit before interestingly moving on to current consumer behaviour in the UK market. While it goes without saying that you obviously cannot lump all wine consumers into one big boat and generalise, I believe that if you segment the market even into a simplistic hierarchy, you can make some pretty water tight assumptions. The favourite current question from most producers in almost any premium non-French wine producing region is the classic… “Are consumers still buying Bordeaux and Burgundy?” For so many, this appears to be the bellwether topic that continues to set the scene for decisions they too may make in due course with regards to specifically distribution and pricing.
Of course the answer to this question is yes, consumers are still buying Bordeaux and Burgundy and in quite good quantities. However statistics can be deceptive. What the superficial sales figures don’t reveal is exactly who is buying the wines. It is only when you drill down and analyse, that you see that the majority of these premium wines are being sold to a small, largely senior, ageing demographic gifted with high disposable incomes. In many cases, they are baby boomers who benefited from rising property prices, low mortgages, steady employment opportunities and two decades of booming city bonuses. Many also reaped the added benefits of rising fine wine prices which allowed their modest cellars to become veritable gold mines in little over a decade allowing many of them to effectively drink the world’s finest wines for free. Post 2009 Bordeaux price rises have now restricted the consumption of most top big name Cru Classe reds to either very special occasions or have been made the sole preserve of London oligarchs and Johannesburg’s tender billionaires.
Basic retail analysis clearly reveals Bordeaux has slowly but surely lost a whole new generation of up and coming wine consumers who had no real financial choice but to opt out of this ultra expensive category in favour of new and exciting Italian wines, South African reds and whites and of course a variety of classy Californian alternatives. The new twenty and thirty somethings are not engaging with the Bordeaux and Burgundy categories in the same way their predecessors did. As a retailer, I can’t help but to interpret this lack of engagement as ‘a generation lost.’ When you convey this anecdotal message to producers, it’s only then that you realise that their stark stares of concern are directly because they have been using the Bordeaux model as a future route map to their own success.
Indeed more and more international fine wine producers are contemplating a distribution shift away from loyal, appointed brand agents and wholesalers in favour of distributing solely through the Bordeaux Place via French négociants. On my last trip alone, big Italian icon name Bibi Graetz of Testamatta fame became the latest Italian cult wine to announce that they would join the likes of Masseto, Solaia and others in directing all their distribution through the grey murky waters of the Place. The first point to note is that this move by négociants to court new suitors is a direct result of both the demise of the Bordeaux En-primeur system and the total lack of customers for the warehouses literally filled to the rafters with over priced Bordeaux Cru Classe wines with no obvious consumers in sight. What about China I hear you say? Even the golden promise of the east has started to fade with demand either shifting to commodity level Bordeaux wines or changing totally to new categories like Australia, Chile and South Africa. Hong Kong sadly is in turmoil and the négociants and Chateaux who shunned their long term, loyal historical markets of the UK and USA in search of quicker and higher profits have seen their fortunes sour of late.
Unsurprisingly, even some of South Africa’s top producers have been lured by the intoxicating promises of the Bordeaux Place. While I have not had a proper chance to sit down with either Matt Day or Hans Astrom at Klein Constantia to hear their strategic logic for the move, they nevertheless seem to see the Bordeaux Place as their preferred route to market for their coveted Vin de Constance liquid gold. If it’s opportunistic brokers you want buying and trading your wines, the Place is the obvious hunting ground but it comes at the expense of smaller independent retailers who do not buy and ship from the Place and one also automatically falls off the radar of the fine wine dining market that only really buys from specialist wholesalers and distributors.
So much of what is currently happening in Bordeaux amongst all the horse trading of the Place seems to go against the modern and changing sentiments of a new thirsty generation of young, interested, affluent consumers looking to engage with regions and wines that they feel they can truly relate to on a deeper level. I might well be in the twighlight of my wine trade career before we all start to see the true impact of changing consumer behaviour but hopefully, South Africa’s finest wines will continue to find favour and resonate with a new generation of wine lovers.
- Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years travelling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London and is today Senior Wine Buyer. He became a Master of Wine in 2007